Compromise Settlement

COMPROMISE & SETTLEMENT

In re Cellular 101, Inc., 539 F.3d 1150 (9th Cir. 2008)

A party’s failure to timely inform the court of appeals of a settlement that it believes

disposes of a pending appeal precludes the party from asserting the affirmative defense of

settlement and release in a later proceeding.

In re Valdez Fisheries Development Ass’n, Inc., 439 F.3d 545 (9th Cir. 2006)

Where bankruptcy court issued an order approving a settlement agreement, and issued a

second order dismissing the case but failing to retain jurisdiction to enforce the terms of the

settlement, the court had no ancillary jurisdiction under Kokkonen v. Guardian Life Ins. Co. of

Am., 511 U.S. 375 (1994) to enforce the settlement.

In re Lanijani, 325 B.R. 282 (9th Cir. BAP 2005)

“. . .[W]hen a cause of action is being sold to a present or potential defendant over the

objection of creditors, a bankruptcy court must, in addition to treating it as a sale, independently

evaluate the transaction as a settlement under the prevailing “fair and equitable” test, and consider

the possibility of authorizing the objecting creditors to prosecute the cause of action for the

benefit of the estate, as permitted by § 503(b)(3)(B).”

In re Rains, 428 F.3d 893 (9th Cir. 2005)

Bankruptcy court correctly found that debtor was competent at the time he entered into a

settlement, even though he had a stroke immediately after the meditation was completed.

In re Andreyev, 313 B.R. 302 (9th Cir. B.A.P. 2004)

Entry of judgment based upon the mistaken impression that the debtor had entered into a

settlement agreement for $1000 in a credit card dischargeability action was erroneous.

In re Mickey Thompson Entertainment Group, Inc., 292 B.R. 415 (9th Cir. B.A.P. 2003)

Bankruptcy court abused discretion in approving trustee’s settlement, where party offered

trustee $45,000 more to purchase claims against insiders than the insiders offered.

Doi v. Halekulani Corp., 276 F.3d 1131 (9th Cir. 2002)

A party’s affirmative response in open court to being asked if she agrees to the recited

terms of a settlement agreement placed on the record constitutes a binding agreement to settle.

Sanctions for reneging on the agreement were appropriate.

In re Guy F. Atkinson Company of California, 242 B.R. 497 (9th Cir. B.A.P. 1999)

Bonding companies, rather than trustee, may seek settlement of bankruptcy estate claims

where sufficient reason exists to allow such relief and companies intend to maximize estate for

benefit of all creditors.

In re Colortran, Inc., 218 B.R. 507 (9th Cir. B.A.P.1997)

Order denying uncontested compromise reversed.

In re Schmitt, 215 B.R. 417 (9th Cir. B.A.P. 1997)

Bankruptcy court properly approved compromise to avoid complex and probably

unsuccessful litigation

Ortloff v. Silver Bar Mines, Inc., 111 F.3d 85 (9th Cir. 1997)

In re Hunter, 66 F.3d 1002 (9th Cir. 1995)

Absent an allegation of fraud on the court, a party who enters into a settlement may not

maintain an independent action to set aside the judgment unless he can fit within the parameters

of Rule 60(b)

Hagestad v. Tragesser, 49 F.3d 1430 (9th Cir. 1995)

Failure to reserve jurisdiction to enforce settlement left D. Court without jurisdiction to

enforce

In re Lendvest Mortgage, Inc., 42 F.3d 1181 (9th Cir. 1994)

Bankruptcy court must undertake an independent allocation of a settlement before it may

conclude that a preferential transfer claim has been satisfied, either completely or partially.

Bance Do Brasil , S.A. v. Latian, Inc., 234 Cal.App.3d 973 (Cal.App. 1994), cert. denied, 504

U.S. 986 (1992); City Equities Anaheim v. Lincoln Plaza Dev. Co. (In re City Equities Anaheim,

Ltd.), 22 F.3d 954 (9th Cir. 1994)

Bankruptcy court could appropriately enforce a settlement agreement by summary

proceedings commenced by motion without necessity of an adversary proceeding, oral testimony

or cross-examination where material facts concerning the existence or terms of a settlement were

not in dispute.

In re City Equities Anaheim, Ltd, 22 F.3d 954 (9th Cir. 1994)

Settlement enforcement – settlement agreement may be summarily enforced where no

material facts concerning the existence of terms of the agreement are in dispute

Kokkonen v. Guardian Life Ins. Co of America, 511 U.S. 375, 114 S.Ct. 1673 (1994)

Court may not enforce a settlement agreement after case is dismissed unless agreement is

incorporated into dismissal or court retains jurisdiction to enforce the agreement

Texaco, Inc. v. Ponsoldt, 939 F.2d 794 (9th Cir. 1991)

Settlement agreement re sale or transfer of interest in real estate must be signed by party to

be charged under Civ. Code 1624(c). Those not covered by the statute of frauds are still

enforceable if common sense says they are divisible.

Wilkinson v. FBI, 922 F.2d 555 (9th Cir. 1991)

District courts have the inherent power to enforce settlement agreements.

In re MGS Marketing, 111 B.R. 264 (9th Cir. B.A.P. 1990)

Settlement of suit reversed for failure to show it was in best interest of estate

Miller v. Christopher, 887 F.2d 902 (9th Cir. 1989)

Good faith settlement bars contribution

In re A&C Properties, 784 F.2d 1377 (9th Cir. 1986), cert. denied, 479 U.S. 854 (1986)

Factors governing review of settlements.

Adams v. Johns-Manville Corp., 876 F.2d 702 (9th Cir. 1989)

Silence…as acceptance and estoppel – Cal. Law

In re Haynes, 97 B.R. 1007 (9th Cir. B.A.P. 1989)

Oral settlement agreement made on the record is binding

CONFLICT OF LAWS

In re Miller, 292 B.R. 409 (9th Cir. B.A.P. 2003)

Nevada law applied to Nevada casino’s adversary proceeding to recover gambling debts

against California chapter 7 bankruptcy debtor.

In re Lindsay, 59 F.3d 942 (9th Cir. 1995), cert. denied, 516 U.S. 1074 (1996)

Federal choice of law rules apply in bankruptcy. Rest 2d Confl. Of Laws applied – Texas

law governed foreclosure of Texas real estate

Rosenthal v. Fonda, 862 F.2d 1398 (9th Cir. 1988)

California governmental interest analysis – contracts

CONTEMPT

In re Stasz, 387 B.R. 271 (9th Cir. BAP 2008)

Failure to comply with repeated orders to appear at a Rule 2004 exam justified order of

contempt and award of attorney fees as sanctions.

In re Hercules Enterprises, Inc., 387 F.3d 1024 (9th Cir. 2004)

In order to find civil contempt, “the bankruptcy court had to find that he violated a

specific and definite order and that he had sufficient notice of its terms and the fact that he would

be sanctioned if he did not comply.”

UMW v. Bagwell, 512 U.S. 821 (1994)

Civil v. Criminal contempt

In re Dyer, 322 F.3d 1178 (9th Cir. 2003)

“Serious” punitive damages may not be awarded under § 105 for civil contempt of the

automatic stay by entities who are not individuals. Only compensatory sanctions, attorney fees

and compliance with the stay may be awarded.

Balla v. Idaho State Bd of Corrections, 869 F.2d 461 (9th Cir. 1989)

Prerequisites for civil contempt

CONTINUANCE

In re La Sierra Financial Services, Inc., 290 B.R. 718 ( 9th Cir. B.A.P. 2002)

Court will not disturb a denial of a continuance for discovery unless the party shows

actual and substantial prejudice.

In re Brewster, 243 B.R. 51, 57 (9th Cir. B.A.P. 1999)

“In reviewing a denial of a continuance, we consider four factors: (1) the extent of the

appellant’s diligence in efforts to be prepared for trial; (2) the likelihood that the need for a

continuance would have been met if the continuance had been granted; (3) the extent to which a

continuance would inconvenience the court and the opposing party; and (4) the amount of harm

the appellant may have suffered as a result of the denial of the continuance. United States v.

Mejia, 69 F.3d 309, 314 (9th Cir. 1995).”

In re Bittleman, 107 B.R. 230 (9th Cir. B.A.P. 1988)

Denial of one hour continuance to produce witnesses is abuse of discretion

100

CONTRACTS – California Law

Humetrix, Inc. v. Gemplus S.C.A. 268 F.3d 210 (9th Cir. 2001)

“Under California law, a plaintiff tht prevails on a breach of contract claim “should

receive as nearly as possible the equivalent of the benefits of performance,” meaning the plaintiff

should be put “in as good a position as he would have been had performance been rendered as

promised.” [citation omitted] This may include lost profits if the plaintiff can prove that the

defendant’s failure to perform caused the plaintiff to lose profits.”

Vestar Development II, LLC v. General Dynamics Corp., 249 F.3d 958 (9th Cir. 2001)

Lost profits from agreement to negotiate sale of real property were too speculative to be

allowed under Cal. Civ. Code § 3000 or § 3301.

In re Diego’s Inc., 88 F.3d 775 (9th Cir. 1996)

Party is estopped from relying on statute of frauds as defense in action for breach of oral

contract where other party turned down other offers in reliance on contract

In re Ankeny, 184 B.R. 64 (9th Cir. B.A.P. 1995)

Parol evidence – integrated k, letter of intent as a contract – whether principal was liable

Brinderson-Newberg Joint Venture v. Pacific Erectors, Inc., 971 F.2d 272 (9th Cir. 1992), cert.

denied, 507 U.S. 914 (1993)

Parol evidence inadmissible when it contradicts the plain meaning of the contract

Moore v. Pollock (In re Pollock), 139 B.R. 938 (9th Cir. B.A.P. 1992)

Severability of security agreement from lease

Whether multiple obligations in an agreement are severable is a question of state law.

Under Cal. Law, this is a question of the parties intent based upon the substance and language of

the agreement at issue. Keene v. Harling, 61 Cal.2d 318, 320 (1964); Gardinier, 831 F.2d at 976.

The Gardinier court noted three factors that should be considered in analyzing whether

obligations within an agreement are severable (1) whether nature and purpose of the obligations

are different (2) whether consideration for the obligations is distinct and (3) whether obligation

statute of frauds the parties are interrelated .

Schneider v. TRW, Inc., 938 F.2d 986 (9th Cir. 1991)

Wrongful termination

Foley v. Interactive Data Corp. 47 Cal.3d 654 (1988)

Tort theories restricted in wrongful termination action

Ins. Co. Of State of Pa. v. Assoc. Int’l Ins. Co., 922 F.2d 516 (9th Cir. 1990)

Contracts/insurance – although primary insurer breached notice provision in reinsurance k

when faced with a claim, the reinsurer nonetheless was not relieved from its obligation under the

k because of its failure to show actual and substantial prejudice to maintain a late notice defense.

101

In re Mediscan Research, Ltd., 109 B.R. 392 (9th Cir. B.A.P. 1989), aff’d, 940 F.2d 558 (1991)

Impossibility – amendment to debtor’s agreement ruled unenforceable for insufficient

consideration and fraud

Milgard Tempering, Inc. v. Selas Corp. of America, 902 F.2d 703 (9th Cir. 1990)

Cap on consequential damages can be removed if repair clause in contract fails of its

essential purpose

First Citizens Federal S&L Ass’n. v. Worthen Bank and Trust Co., 906 F.2d 427 (9th Cir. 1990)

Fiduciary relationship should not be inferred in bank loan participation agreements absent

unequivocal language to that effect in the agreement

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Compromise Settlement